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Egan-Jones cuts Spain's sovereign rating further
NEW YORK, July 20 |
NEW YORK, July 20 (Reuters) - Rating agency Egan-Jones on Friday cut Spain's credit rating further into junk status, citing the weakening economy including crumbling finances among the country's regions and the ailing banking sector.
The agency slashed Spain's rating to CC-plus from CCC-plus. Spain will "inevitably" be faced with more payments to support banks and the weaker provinces, Egan-Jones said in a statement.
Spain's banks have been an ongoing problem for the country. Euro zone finance ministers approved the terms of a loan of up to 100 billion euros for Spain to recapitalize its banks on Friday, but the exact size of the support will only be determined in September.
The government now sees the economy contracting by 0.5 percent in 2013 after shrinking by 1.5 percent this year.
Complicating central government efforts to stave off a full-blown bailout, the heavily indebted eastern region of Valencia said on Friday it would apply to Madrid for financial help. That spooked markets further as Spain's 10-year debt yield hovers around the unsustainable level of 7 percent.
Spain is currently rated BBB-plus by Standard & Poor's, with a negative outlook. Moody's Investors Service rates the country Baa3, and Fitch rates Spain BBB.
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